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Foreign and domestic ownership, business groups, and firm performance: evidence from a large emerging market
Author(s) -
Douma Sytse,
George Rejie,
Kabir Rezaul
Publication year - 2006
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.535
Subject(s) - shareholder , extant taxon , business , emerging markets , differential (mechanical device) , phenomenon , accounting , corporate group , foreign ownership , differential effects , monetary economics , corporate governance , economics , finance , foreign direct investment , medicine , physics , macroeconomics , quantum mechanics , evolutionary biology , engineering , biology , aerospace engineering
We adopt a multi‐theoretic approach to investigate a previously unexplored phenomenon in extant literature, namely the differential impact of foreign institutional and foreign corporate shareholders on the performance of emerging market firms. We show that the previously documented positive effect of foreign ownership on firm performance is substantially attributable to foreign corporations that have, on average, larger shareholding, higher commitment, and longer‐term involvement. We document the positive influence of corporations vis‐á‐vis financial institutions with respect to domestic shareholdings as well. We also find an interesting dichotomy in the impact of these shareholders depending on the business group affiliation of firms. Copyright © 2006 John Wiley & Sons, Ltd.